“From the Courtroom to the Conference Room” An interview with Mike Burshteyn, CEO, CryptoMove

As CryptoMove's Founder & CEO, Mike Burshteyn drives all company business strategy and execution. Before starting CryptoMove with his father, Boris, Mike was a cybercrime and data protection attorney. At Perkins Coie he worked with leading technology companies like Google, Uber, Amazon, and Microsoft, as well as startups in hypergrowth, on data privacy, security, intellectual property, and computer crimes. Mike was the #1 ranked college debater in America at UC Berkeley.

What does CryptoMove bring to the marketplace?

CryptoMove protects data with continuous fragmentation and moving target defense. Current data protection methods leave sensitive data, keys, and secrets as an easy stationary target at rest. CryptoMove’s key vault product is all about protecting authentication tokens, API keys, application secrets, SSH keys for cloud services, and secrets for containers and Kubernetes. Developers who do cloud native development or use cloud services, today, find it difficult to manage keys and secrets at scale. CryptoMove has this revolutionary technology that can help to solve those challenges.

If you're working with cloud services, if you're working with containers, an effective secrets management tool like CryptoMove can increase your speed of development, make life easier for developers, and also provide additional security.

What was your motivation while building up CryptoMove? What was your drive pushing you forward?

It all started with my co-founder and our CTO, Boris. He invented this technology. For decades during his career he was building distributed systems and he was always thinking about how to do that more efficiently and more effectively. Thinking about the question of “what happens if encryption fails” led Boris to developing CryptoMove. When he needed a business partner, that's when I ended up quitting my job and joining in. By the way, we are a family business — my co-founder is actually my dad. TL;DR: my dad invented this technology and needed help with the business so I jumped in.

What do you think is the most challenging thing you're facing at CryptoMove?

That's a great question. There are so many challenges with a startup all the time. I think that right now the biggest challenge that we are facing is this idea of how do you scale the organization. We've been experiencing a lot of growth: new customers, new users, new team members. Every time that you experience significant growth in the company it seems like everything has to get rebuilt in terms of the processes, whatever everyone is working on and whatever everyone is focused on. Being able to do that rapidly and in a way that maintains a really high standard for execution is a big challenge.

Can you tell me a little more about your background before starting CryptoMove?

I grew up in the Bay Area and my parents are both software engineers. They used to work at all kinds of startups and tech companies. When the dot-com bubble burst, I remember asking my parents “where did the traffic go?” because all the roads cleared up. So, I kind of grew up around tech. I ended up in college at Cal - most of my time was spent on the debate team,  where we were ranked number one in America. We would research all sorts of different topics and actually one of the things that I researched quite heavily was cybersecurity and data protection. After college, I ended up working at a startup. It was a great opportunity to learn a little bit about all the different ups and downs and parts of the startup, and I ended up starting my own ecommerce business focused on debate research for students, which was fun.

Soon after college, I ended up going to law school and became an attorney. As a lawyer, I ended up in this practice group at Perkins Coie doing data security, cyber crime, intellectual property, litigation, and privacy. We were working for technology companies, startups, big ones, small ones. I had a lot of exposure to cleaning up messes, such as API keys improperly checked into GitHub. Now, coincidentally, CryptoMove’s product is meant to avoid that. Meanwhile, my dad was working on CryptoMove in stealth, prototyping it. We were helping with the patents and standard legal work. What he really needed, though, was a business partner. So I went to my bosses at the law firm and they encouraged me to take the leap. That was about 3 years ago.

Out of all of your experience, what do you think best prepared you for your current role?

I don't necessarily think any one thing prepared me. Frankly, every day and every challenge we encounter is something new and unique. It’s all about being flexible. My approach is generally to try to learn as much as possible from people around me. There seem to be a lot of startups where founders knew they wanted to start a company and they took a very deliberate path towards doing that. In the case of CryptoMove, it kind of just happened and wasn’t necessarily our plan. We're just trying to do the best we can, taking advantage of opportunities.

Going back to the first day of working on your startup, what advice would you give yourself?

Apply to the Alchemist Accelerator, which we actually did. Not on the first day, but a couple weeks afterward. I would definitely do that again. I would just try to iterate as rapidly as possible. I think that's something that I would say could benefit any startup. Create a hypothesis, test it quickly, and iterate and move on. CryptoMove today, our product, our go to market strategy, everything about the company, could not have been predicted 3 years ago. It took a process of rapid iteration. That’s been really important.

What was the most valuable thing you learned from Alchemist?

Alchemist was huge for CryptoMove and for a lot of companies in our class. We were first time founders and even though we had a lot of startup experience, we had never raised VC funding. Alchemist set us up for our first investor, Tim Draper and Draper Associates. We met at an Alchemist Investor Feedback Summit. Alchemist set us up with our first customer, which was the Department of Homeland Security via a scouting program they had, that led them to look at Alchemist start ups. Just working with Danielle, Ravi, Ash, and everyone helped give us the building blocks of the common pitfalls that you face in a startup. Even now, Danielle is an observer on our board. We have continued to work closely with Alchemist. Across the board it was really valuable to us.

If you could do Alchemist again what would you do differently?

I think that there are things that we did while we were in Alchemist that in retrospect we shouldn’t have done. For instance, we spent a lot of time going to a bunch of pitch events with corporations. In some cases they were helpful but there is a lot of corporate innovation tourism that is easy to get sucked into. When we were working on our product and asking users for feedback, that was the most valuable thing. In many cases, corporate innovation teams are just cycling through Silicon Valley almost like they are at a zoo. It’s a common pitfall for a startup, especially at that early stage. When you meet with big companies you think you can get a big contract with them, but in reality they’re just enjoying the scenery and taking some notes on startups. Alchemist calls this “corporate tourism.” Just to take note of what really qualifies a lead and whether there is corporate innovation tourism going on can save a lot of wasted cycles.

What entrepreneurial lesson took you the longest to learn or are still learning?

I think that there are different lessons for different people. For me one of the biggest adjustments I’ve had to make is that in a startup there are ups and downs every single day. Especially as the company gets bigger, you could have massive wins in one area and fires in another area happening simultaneously. You can’t ride that emotional rollercoaster. Also, since I was a lawyer and I was a litigator, I was doing a very specific type of work that required being extremely aggressive, either defending client interests or going after cyber criminals. There’s a shift in style. There definitely was an adjustment period. I can’t write long emails anymore and definitely don’t check all my punctuation. Obviously, you can’t negotiate a business deal the same way you negotiate a settlement in a lawsuit.

What constitutes success for you, personally?

For me, for my co-founder, and I think, for everyone at work, success at CryptoMove means different things for different people. But, we all are excited about what we’re doing, about building a new product from scratch. Take CryptoMove’s technology, this idea of moving target defense and moving target data protection, which no one has ever heard of before. People think it's crazy when they first hear about it. We’ve got this really innovative technology, patented globally, that is really changing how organizations such as our government and military protects its data. That is exciting. In some ways success is being able to do it for another day, because it means we’re growing. Startups are always on a fixed timeline. There's a runway. You're always trying to get to that next level. As long as we can wake up and keep doing it, we know that we're succeeding.

Do you have any insights that you want to share to the next generation of Alchemist Accelerator founders?

It is really great to take advantage of the Alchemist network. There are people with expertise in different areas and you can fast forward a bunch of learning by engaging with the right people. At the same time, you have to really be careful about applying advice to the specific context of your business. I think that there's so many resources, especially in the Alchemist network that can be leveraged.

Do you have any insights for the next generation of entrepreneurs who are specifically manipulating and working with data?

When it comes to data, in the security space and for security startups, it's such a crowded (and overfunded) market that it can difficult to stand out. We've done certain things, like making our product SaaS first. We really focus on our users, which are developers, devops people, security engineers, rather than just trying to sell to IT managers. It’s a very different approach than what you'll see with most security startups. In today and tomorrow’s worlds, data may very well become the most important resource—as impactful and as distributed as oil. Given this, CryptoMove’s data protection innovation via fragmentation and continuous movement and mutation is vital.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

“Understanding What it Means to be a Passionate Founder”: An Interview With Derek Chau, Partner, Acorn Pacific Ventures

Over his career, Derek has been involved in over $3.5B of private and public company acquisitions. Prior to Acorn Pacific, he was the co-founder of a machine learning company in the news aggregation space and also served as the COO of a leading-edge government software company. He is a CFA charterholder and also actively mentors companies in the Dartmouth and Harvard alumni networks.

Can you tell me about your background?

I was an executive at a couple of software companies ranging from a 300-400 person enterprise software company, down to a startup level software company. Prior to that I was mostly in corporate finance.

Out of all your experience, what do you think best prepared you for your role in Venture Capital?

I served a lot of senior level operations, seeing--for a lack of better words--a lot of blocking and tackling. Dealing with a lot of headaches on the operational level really prepares you to understand what it takes to scale a company. I also had some experience operating a very small startup, working with my own team, bringing everything together, and raising capital.

Can you tell me more about Acorn? What is the approximate size of your fund? How much do you normally invest?

Acorn is a network of funds. Acorn Pacific Ventures is the fund with myself and three other partners.

Acorn was founded about 18-19 years ago as one of the first Chinese Americans funds here in the Valley, funded by a number of very successful Chinese American entrepreneurs in industry. They banded together with the vision to give back to the community, investing in founders and supporting that ecosystem.

Over time that morphed into a series of funds. Acorn Pacific is the forefront here in the valley. There are a couple funds in Taiwan and one in Shanghai, and a partner fund in Singapore. Between that ecosystem, we invest in founders and in their vision. We also look for companies that over time have an international component and can leverage our cross border experience. Things like optimizing supply chains and technology transfer.

How does your fund differ from other funds?

There are two main factors. Whereas a lot of funds have good operational people, at Acorn we  bring together all of our operational teams. From the very first founders, it is a requirement that we bring in people who have seen it from a variety of standpoints. Everything from robotics to supply chain optimization to software.

We look for people who've been through it and have got battle scars. People who understand how it works and are very sympathetic to founders, understanding what it's like to raise capital and scale a company. Understand what it’s like to go through the good times and the bad times.

Can you tell me about how you make decisions in investments?

We try not to be overly formal. We don't run traditional investment communities. Rather, we want people to meet people. So, the operating partners and GPs at Acorn want to work with folks. We want you to meet the folks who are going to be helpful and who are going to be working day to day with you.

As those conversations go over time and people become more comfortable, we run through our diligence. That is our process. We of course make unanimous decisions about the partnership. Once we are invested we get behind the company, working through the good times and bad.

How do you deal with cold calls and e-mails? Do you have any advice for entrepreneurs trying to reach out to the VCs?

It’s very very hard. We don't put a lot of weight on them. We're not trying to exclude cold emails and cold calls, but it's very difficult to get our attention. It’s not a deal that's introduced by someone in our broad network, which can be very broad. We're not going to give it a lot of weight unfortunately. By chance you may get our attention and may get a response but it's pretty rare.

What's the number one red flag you see that makes you pass on investment?

There's a lot of flags that we look for. A team dynamic is really important to us. First and foremost we invest in people. If we see that the team of founders or co-founders are not gelling or there’s some dynamic that’s missing there or if the team is not cohesive, that’s big flag for us. If we feel the technology is something we don't feel that there's much defensibility in, that’s another piece that could also raise a lot of questions. I don't think there's ever just one flag so to speak.

Can you tell me more about your investment in MetaData with Gil?

We met Gil probably a couple of years ago, and at that point the company was still very young. First and foremost I liked Gil. He had very good passion when he spoke. The market he is in is a very crowded space. It’s one that I traditionally did not spend a lot of time in, but there was something that was interesting about Gil.

After the first meeting, we continued to keep in touch. He did what he said he would do in terms of delivering, in terms of top line, in terms of product, and customer traction. Transparency was really important to us and and Gil was super transparent. When we talked, we could tell he had a lot of candor and things clicked. We could also tell he cared very much about making the best out of his company and also being successful for his investors. The fit was there in terms of the people.

How do you identify passion in entrepreneurs?

It's hard to boil it down to a few characteristics. The advice I give to all founders is to be true to yourself. If you’re not true to yourself, we can see through that. If it’s not something you are passionate about it’s, for a lack of a better word, fake. Obviously.

In Gil’s case, he was in an industry he spent a lot of time in. That's a good sign for us. He came from a frustration with this space and he saw an opportunity to make things better. Gil’s case is just one. We can tell even though he's been at a few different companies, he was very passionate about making sure he would succeed. He was hungry.

What do you find difficult about seed stage investing?

Startups are hard. Anyone who has done it knows that. It's easy to, after the fact, describe how everything went right, but we all know it's so non-linear. There's so many things that can go wrong. Everything from product market fit to technology to the team. It’s just pure luck.

For us there’s never just one thing. There’s so many reasons that a company can fail, even if a company has all the right people and execution. There's no perfect investment. For us it's very much an art and it’s really going with your gut.

Would you be more likely to fund a very experienced team with a mediocre idea or a novice team with an amazing idea?

Every situation we come across is different. It’s really hard to boil it down to such simple terms. If I had to give an answer, I would say that The Valley is full of ideas. There’s not a lack of ideas, but it’s more about the ability to execute. Operational experience counts for a lot.

Is there any one piece of advice you want to give to founders that doesn’t get shared enough?

Be true to yourself and be humble. I think humility is a really important skill that we really value at Acorn. Rejection is hard and it requires endurance and perseverance. It’s not an easy thing to do. We've done it and understand it. It’s hard to look around you see all these other startups that are getting so much money and valuations, but they’re the exceptions. If you’re having trouble raising money, just keep at it, believe in yourself, believe in your team.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

Learn how to grow your startup with Sean Ellis, the “Father” of Growth Hacking

If you’re looking for experts that can advise you on when and how to scale your startup, Sean Ellis should be one of your first calls. Sean coined the term “growth hacker” in 2010, after helping companies like Dropbox, Eventbrite, LogMeIn, and Lookout achieve breakout success and billion-dollar plus valuations.

Today, he’s the Chief Evangelist at GrowthHackers, a company he founded in 2016 to “help teams work together to drive breakout growth results for ‘must have’ products and services.” During the summer of 2012, Sean spoke at Alchemist and distilled some of his most valuable insights around product-market fit and developing strategies for growth. His advice provides a significant and preliminary roadmap for early-stage founders, as they look to take the next steps with their startups. Sean shared insights across several different, critical areas.

Product-market fit is important…but what exactly does it mean?

For every startup, finding “product-market fit” is a critical early inflection point. Sean notes that Marc Andreessen, founder of a16z, and one of the first people to coin the term, emphasized that founders should be obsessive in pursuing this state. Andreessen sees it as so make-or-break that every business can be categorized in a binary manner, as either “pre” or “post” product-market fit.

Despite its importance, Sean observes that a metric-based, universal definition of product-market fit has proven elusive. Through his operating experience, Sean has developed a potential solution to this “mystery.” Put simply, companies need 40% of their users, within a large segment of their market, to be in a place where they’d be “very unhappy” without the product. That seems like a clean, elegant solution. But, what is a large segment of your market?

Sean has a few answers. First, you should look for some type of 40% cluster within your user base. Next, try to figure out whether that group is meaningful, or merely an edge case. For example, if 80% of men are really unhappy without your product, that’s meaningful. However, if 80% of men between the ages of 37-40 in Oakland are really unhappy without your product, that’s an edge case.

While definitions are a helpful starting point, there is limited utility in theory. Sean’s unique value comes from his experiences in helping companies achieve breakaway success. To reach product-market fit, he has a few key suggestions.

Have a concrete plan for growth.

  • Pain Point First: Find that there’s real frustration around the problem you’re solving, before you even write a single line of code.

  • Early Feedback: Release an MVP to get feedback on your product as early as possible.

  • Find Your “Must-Have” User: When you find this user, or group of users, who really need your product, learn as much as you can about them. Explore some of the following questions:

    • Why do they need your product?

    • How are they using it?

    • What’s the primary benefit they’re getting from using your product the way that they do?

Sean realizes that it’s tempting to find people who don’t like your product, so that you can try to improve and iterate. It makes sense, but he emphasizes that it won’t lead you to create consistent value. Instead, he advises that you discover everything you possibly can about your “must-have” users, and find out what makes their experience “must-have.” From there, you can start to identify must-have groups and execute on their needs, as they continue to engage with your product. Sean stresses that your product roadmap should be tailored to replicate the experience that’s been resonating so strongly with these must-have users.

Funnel optimization is critical, and it always pays off.

There are a few key skills that can help founders on their journey to product-market fit. According to Sean, funnel optimization might be the most important. He emphasizes that it’s necessary to analyze every point of the conversion funnel. This process can be frustrating, because users are typically unresponsive and unwilling to give meaningful feedback.

However, even if you’re frustrated, Sean says you can't give up or give in. Even a 1% response rate, with months of funnel analysis, can provide significant value. Sean explains that in one case, a company he worked with tripled their conversion rate with minor tweaks to messaging on their platform. Through survey results, they were able to see that users were unsure whether they were actually downloading a free version of their product. A minor tweak that more clearly distinguished between free and paid versions led to the 3X increase in conversion.

Know when to grow.

For most companies, there’s a lot of uncertainty around when and how to scale. Sean suggests that it’s optimal to spend and scale aggressively when you’ve reached the key 40% very unhappy stage, and when you have a positive ROI.

He also notes that, for freemium products, the free version is an excellent customer development channel for premium offerings. This testing ground lets them observe actual user behavior and see where there’s real value. He implores the audience to think about products in their lives that hooked them on their free versions, before getting paid subscriptions. For Sean, Skype was one of these products that quickly came to mind.

The network effects complication.

Toward the end of his talk, Sean makes a key distinction: there’s a big difference between traditional growth companies, and companies that rely on network effects. He asserts that, with network effects, it’s not possible to simulate the value of the company at critical mass, because it continually gets more valuable over time.

These companies don’t have the luxury of finding product-market fit, followed by optimization and growth – they must do all these things at once, which makes the process much more challenging.  

Key takeaways in 50 words or less.

Find people who really need your product and engage deeply with them. Optimize your sales process to increase conversion at every point of the funnel. Recognize that purely viral growth is not sustainable. There has to be a “must-have” experience underlying growth, or you won’t be able to retain users.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

“What do VCs value in founders?” An interview with Jean Kovacs, Partner at Hillsven Capital


Jean has more than 30 years’ experience directing technology companies, and delivering exceptional results with growing enterprises. She is currently president of the Northern California Chapter of the HBS Alumni Angels, a forum for Harvard alumni to connect with, learn about, and invest in quality early-stage companies. Her resumé includes serving as CEO and Co-Founder of Comergent Technologies, and Co-Founder and EVP of Qualix Group. She was named to the Silicon Valley/San Francisco Business Journal’s list of Most Influential Women in Business and has been profiled in Fortune, The Financial Times, Computerworld, Internet World, and InfoWorld. She holds an MBA from Harvard and a BS from Northeastern University.

Can you tell me a little more about your background before venture capital?

I worked for technology companies in marketing, product marketing, customer support, sales, applications engineering, and then went to get an MBA, thinking that I was going to go to Wall Street. I ended up deciding to come out to the west coast. I worked at Sun Microsystems, which went public, and then Frame Technology, which also went public. Following that, started a company (Qualix), which we took public, then started another company, which we sold to AT&T. I was always on the operations side until I got involved in angel investing. About two years ago I joined Hillsven as a Partner.

What do you look at when you're looking at a startup?

We typically focus on enterprise companies. We don't do a lot of marketing of our fund. We typically look for “curated deals”, deals that comes out of an accelerator that we trust or is referred to us by someone that we trust. We'll do two to three deals per year. We typically go in at Seed and lead the round. We put in anywhere from $500K-2M.

What about MetaData stood out from the rest of the investments you were thinking about making?

I should say that I was not with Hillsven when they invested in MetaData, so this is a little bit of hindsight on my part. One of the things we liked was that Gil started as an engineer then got his MBA and went on to be a CMO, so he actually lived the customers’ lives before he started the company. He had that domain expertise and could talk the CMO language. As he was being a CMO he was thinking, “Why hasn't anyone developed a product like this?”

We felt he had that unique combination of business experience, domain experience, and technical experience. That experience and vision, combined with energy and tenaciousness, were the right ingredients that lead him to start MetaData.

What are your thoughts on Alchemist?

I like the Alchemist team. They seem to have a higher bar for companies going in, which also results in a higher bar for companies who are exiting.

When I talk to entrepreneurs who have gone through the program, they all universally say that it was really worthwhile. There are a lot of incubators and accelerators. That makes for a lot of noise, but I would say Alchemist is certainly in the top percentile, based upon their results.

Is there anything you’re excited about in the future?

I just think there's a huge opportunity for what we do. We're seeing SaaS is leading to the democratization of the enterprise. No longer are business people in enterprises beholden to huge IT departments or huge ERP vendors so that everything has to go through. It's much more accepted now if you have an application that fits a need in an organization, to go ahead and get that and deploy it within your organization. It's an opportunity we're seeing for startups that we haven't seen for a very long time.

What do you think is the number one red flag that would make you pass on an investment?

We invest very early on. Our number one priority are the founder(s). If we don't feel good about the founder and the founding team we won’t invest no matter how hot the space is.

What makes a good founder?

First, it's someone who can articulate a problem and has domain expertise with that problem. Second, it’s someone who can attract and build a great team. Third, the founders and especially the CEO has to be tenacious. Probably less than 10 percent of the companies that get started have an easy route creating a product, bringing it to market and growing sales. There are always ups and downs, so we need to know that that entrepreneur is so passionate that they're going to forge ahead even when the going gets tough.

Would you be more likely to fund a very experienced team with a mediocre idea or a team of novices with an amazing idea?

It's about the quality of domain expertise and focus. If they're novice they have to be coachable, have energy, and be tenacious. We'd rather have someone come in and say, “I know this problem. Here's how you solve it and here's who I've talked to and here’s who I’ve sold to.” Having early traction in a company is really critical.

Which of your investments are you most proud of and why?

We’re proud of all of our investments!

Can you tell me about how you deal with cold emails and calls?

That’s a tough one. We’re so busy getting curated deals that it’s hard to answer cold emails/calls. We try to get to them, but they typically don’t get the attention that we give to curated deals.

Earlier you spoke about finding deals through references you trust. What makes a reliable reference?

In addition to a few accelerators we trust, we get deals from several sources:

1. Other investors who understand our model and know how we invest in and support our companies

2. Our CEO’s/Founders - They understand our model and we trust their insights.

3. Customers. We keep in touch with enterprises and are always talking to them about the problems they have. If they find a company who is young and helping them solve a problem, we want to talk to that company!

What separates Hillsven from other funds in the area?

We take a very active role. Typically, we lead the round, and always take a board seat. There are three partners here and we all have different skill sets. We’ve all been founders ourselves and our careers have been focused building companies, not just investing. We really spend time getting to know the company, and helping with what they need, whether they want to brainstorm on technical concepts or market fit.

When they’re getting ready to raise their Series A, we also spend time helping them and making introductions.

Bottom line: We view ourselves as partners with our investments, not solely as investors.

What do you feel like your role in the company is?

We’re there to support the CEO and the team. If the CEO comes in saying I'm really wrestling with this or that, we’ll pull in the right partner who can help. If we don't have a partner with experience in that specific area, we all have networks that we can reach out and find someone who knows a lot more about a specific area.

What you think is the biggest indicator of failure for a startup?

If I were to sum it up, I would say believing your own bullshit. Someone who pulls together a great pitch and says, “if we build this they will come” and not really having that tie into the market and customer prospects. When you look at Gil, he was a CMO and he knows the pain that they have. We have a company called Retail Zipline, another Alchemist company. The CEO of that came out of the retail space. She knows the pain. It really is having that passion where you say, “this is an issue that my team and I can fix, and it's a big opportunity.”

Is there any one piece of advice you would give founders that you think doesn't get shared enough?

Do your homework. Look at the VC’s web page, talk to their portfolio companies to figure out what they focus on, get your information all lined up. Then, have the tenacity to, in a nice way, keep on top of the process.

Can you tell me about your experience as a woman in Venture Capital and any advice you'd give to young entrepreneurs and investors?

I would say right now, it's a fantastic time to be a female in the venture and startup worlds. There's been so much awareness in the market, that I think people are really realizing the talent pool and are going above and beyond to access it.

Do you have any advice for mothers who are trying to grapple with motherhood and their career?

It's never going to be easy. One or the other is going to suffer and I think you just have to make peace with that. Sometimes you’re going to be more career-focused and sometimes you’re going to be more family-focused. I think as a mother you've got to just come to grips that you can't be all things to all people, all the time.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

“Breaking Down the Path to Entrepreneurship”: An Interview with Gil Allouche, CEO, Metadata

  

Gil Allouche is a tech entrepreneur whose passion for artificial intelligence (AI), big data, and growth marketing led him to start Metadata in May 2015. As the Founder and CEO of Metadata, Gil prides himself on building a customer-first company. He is part of an ambitious team that is committed to solving a major problem that B2B marketing and sales professionals face -- generating qualified, opt-in leads. Prior to Metadata, he ran marketing for Karmasphere (now FICO), Qubole and Silver Spotfire (now TIBCO).

Could you explain a little bit more about what Metadata brings to the marketplace?

Metadata is a technology software company in San Francisco. We are disrupting the B2B marketing space. We automate the marketing operations role with automation and AI. There are many tools in the B2B marketing space for tag management and email marketing automation and advertising and data vendors, etc. What Metadata does is connect all of those tools together, learn what worked and what didn't work, and then orchestrate operations from within those technologies using an API, so that people don't have to log in every morning and manually operate those tools. That's the big vision.

Today we connect about 40 different tools in paid media and do anything from sourcing audiences to getting all of their PIIs and cookies, etc. Then, we execute campaigns on social media, retarget, and optimize all of those campaigns automatically using KPIs from Salesforce and market automation from the customers. We have about 60 customers. Some of them are enterprise and some of them are mid-market and startups.

Can you tell me a little more about your background before you started your startup?

I’m a software engineer. I’ve written code since I was a kid. I moved to the U.S. about 12 years ago to do my MBA at Babson College, an entrepreneurship school in western Massachusetts. After that, I spent eighteen months running product for B2B companies. Then I moved into the marketing realm. I was a very technical marketing manager, so I relied on 3rd party contractors to do my copy and communications. But, I had complete responsibility for on demand generation, making sure that my counterparts have a pipeline to go and sell. I did that in three companies. Two of them got acquired. At the third one, I was the first business hire. I was in a small team in a tiny room, and today Qubole is a few hundred people.

After doing that for about 7-8 years I had to choose whether I wanted to continue my career as a CMO (Chief Marketing Officer) and just work for bigger companies, or switch into the entrepreneurship realm, which is what I'm interested in, and build a product that will serve those non-technical CMOs and enable them to do what I did, but much easier. I started a consultancy with Qubole becoming my first customer. Three years later, this is where we are.

What previous experience do you feel best equipped you for your role right now?

Having the experience from both sides, as the software builder as well as the marketing software user. Building systems with AI, building Web products in the first part of my career and then switching up to doing an MBA led me to understand the business side of things and which software can solve for critical business KPIs. Then choosing the marketing space I wanted to innovate in, and then working as a CMO in a B2B company, gave me both points of view. All that prepared me for building the right software and serving the customers.

I started software companies before, and I'm always passionate and excelled in that type of culture, without everything set up, An unstable environment and high risk, that's where I thrive and every year we exist makes me better entrepreneur for the future.

Do you believe that having a technical background first and then understanding the business side of things is the best background to have? Or do you believe learning the business side of things first is more important?

It's hard for me to say because I'm already subjected to the way my career went and so it’s hard for me to roll back and say maybe there’s a better way. I think I'm well equipped to run Metadata because I have a technical background and then I had the customer experience. Would it be better the other way around? Maybe. I don't know many people who have done the other way around.

The vast majority of people that I know in my position have a technical background and they know what's possible to build to begin with. They build it in an amateur way using scripts, which is exactly what I did for eight years while I was running marketing. Then, after seeing it working, I built some of the tools myself, used them in my role and then built a generic solution for the rest of the market. It would not have been possible to do that the other way around because I wouldn't even know it's possible to fix using software.

If you could go back to the first day of your startup, when you were still building Metadata up, what advice would you give yourself?

Probably spend more time building the software. Maybe give delivery more time, building something small, focused, and that was more of an MVP (Minimal Viable Product). In my mind my MVP was more of a VP and not so minimal. It was more of a bunch of different tools put together. I think I would’ve focused on building something more holistic, but more minimized. It took us about a year to bridge that gap to what we have today.

I probably would have invested a little more in engineering and product earlier on. Today that’s our main focus I’d also recommend reaching out to all of your colleagues, former managers - those will be your first customers, advisors, investors and will give you friendly needed feedback. Finally - I think it’s critical you learn how to manage your own psychology. Starting a company can be a tough journey and you need to learn to forgive yourself, adapt quickly and include others in your journey.

What do you think is the most valuable thing you learned from being a part of Alchemist?

I learned a lot from Alchemist. I learned about how seed investors perceive companies. I think I'm good at it, thanks to Alchemist. I also learned how to pitch my company, self development and reaching my first paying customers using CAB.  That was very helpful and Alchemist definitely helped me do those. And finally the network, connections and practical 1:1 programming. Big shout out to Danielle and Ravi who are always there.

If you had to give some advice to someone in Alchemist right now, what kind of advice would you give them to make the most of the experience?

I think you have to come to Alchemist with something to offer already, meaning some technology or customers, and then take that raw material and build upon it. If you don't have much, I would recommend to wait a quarter or two until you do, because otherwise you're going to waste your time in the program.

Another piece of advice I have is to start the program before the program starts. Danielle and Ravi will attest that I was in touch with them maybe two or three months prior to the program starting, doing email campaigns to get investors, asking advice about evolution and about the rest of the things that I had challenges with before the program started. So, moving at your own pace with the leaders of Alchemist I think was the key success factor for me.

Finally, pick your battles in terms of what you want to participate in Alchemist and what you don’t. Running a business that already had some traction, I did not want to stop everything and attend every talk that Alchemist had. Rather, I wanted to keep running the business and use Alchemist whenever I saw fit, maybe 40 percent of the capacity or maybe 50 percent of the capacity. I don’t know if Alchemist will be happy with me sharing this, but that's how I set it up, and it was very successful for us because it allowed us to keep the business running, and then use Alchemist for the things that we actually needed help with. Versus, go line by line with a program that was not always fitted to us because some companies were in a very different stage. We already had 30K MRR. and were kind of already started.

Given your background, do you have any advice for other foreign founders?

Being in the U.S. I would say visiting the U.S. and going after local companies with what is called the customer advisory board (CAB), a tactic that Alchemist educates about, is a great idea. Coming here, doing the activities, being at the office, I think is very important. I would also say, bring your team members with you to Alchemist. You need them involved, and not just your founders. You want to bring your co-founder and whatever the team is and bring them into the program and get them involved.

I would say especially for foreign partners to begin the process of reaching out to Angels and Seed Investors prior to joining Alchemist and work hard on getting some funding prior to the demo day. We got some money at the Investor Feedback Summit and we got some money prior to the program even starting. That was very helpful for us to give us a good sign that the strategy of Alchemist works, prior to the program even starting. It was very helpful, especially for a foreigner who was not very knowledgeable about those things. That’s a piece of advice I would give someone who's coming from a different country to Alchemist.

Was there anyone in your life that helped you as a mentor and influenced you a great amount? If so, what about them helped you?

I'm very lucky to have many mentors. I think I wouldn’t be able to get where I am without them. Some of them belong to Alchemist, some of them belong to Alchemist network, some of them don't. First one that I had goes all the way back to my high school teacher who gave me confidence and belief that I didn't have in myself back then. That’s the first one, back when I had some issues in high school. Then, if I take it all the way to Metadata time, my first advisor, outside of Alchemist, was Mickey Alon, a serial entrepreneur from Israel. He helped me get started with my very first pitch decks, etc.

And then one of the other very prominent advisors I had to date, I would say my strongest advisor, was Bill Portelli. He is from the Alchemist network. I met him at an Alchemist event and he's been tremendously helpful with all things Metadata from sales to personnel issues, etc. Other wonderful advisors who constantly tell me things how they are include Boris, Derek, Jean, Bobby, Jonathan, Gary, Eli and the list goes on. Maybe that’s another important advice - get your advisory board early on and keep them engaged. They can do magic.

And I would say that Danielle has been very helpful. You know Danielle is kind of the de facto manager for Alchemist. She makes a lot of things happen and she's also very good at advice and very resourceful. I think she provided great advice and mentorship at times when I needed it.

What are you excited about for Metadata in the coming future?

Growth. We are onboarding more and more customers than ever before. The last four months have been stronger than the previous twenty-four months before them. We're seeing a good amount of growth. We're also seeing a lot of confirmation from the market that what we're doing is the future of marketing. So now it's a question of how quickly can we leverage that growth with the value, raise more capital, and then grow the company. I’m excited about the next stage of the company moving from 60 customers to 200. Having a fifteen person team to having a thirty person team. I'm excited about those challenges.

What constitutes success for you personally?

Success is to see a product that you really needed in the market being used by enterprise companies like Amdocs, Hitachi, and SugarCRM. Having companies like these use the product, successfully renew, excel, and giving us testimonials and case studies. For me that is success. That means that the initial idea that we had and the solution to that problem that we thought exists, these are confirmation for a product market fit. That's the first piece of success for a company at our stage.

The next success would be a big institutional venture capitalist standing behind us with a large sum of capital to grow, and of course reaching profitability. For me a personal milestone that I'd like to achieve. Those three things I think are the major successes in relation to Metadata.

Are there any other insights you've learned that you want to share with the next generation of entrepreneurs?

I think the biggest thing to do for an entrepreneur is to get started. To unblock your own limiting thoughts of “what needs to happen before I’m ready to start a company.” Nothing has to happen. You just have to start it and then break down the path to entrepreneurship through small wins. To put the first landing page together, talk to the first 20 prospects, talk to the first angel, put it on Facebook. Share it. Don't be secretive about your startup. The moment that you think you're ready to, if you have a problem that you're very passionate about and you have the domain expertise, you shouldn’t wait a second, you should just start it and then let it grow and let the market reject your idea or execution. You may have to switch, to change your idea, change your execution strategy, change your partners, what have you. Or if you see that it's gaining traction then just continue to roll with whatever is coming at you.

I would say that the biggest hurdle is for people to change their mind and say I'm an employee now and today I'm an entrepreneur. Nothing's doing it for you. You have to do it on your own. The best way to get it is to just start taking action. You don't have to resign from work right away, just devote 3 days or a week to it for a few months and you should be able to see some progress before you make the switch completely. That’s that's the biggest hurdle I would say for entrepreneurs.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

An Interview with Arun Penmetsa, Partner, Storm Ventures

 Arun Penmetsa is a Partner at Storm Ventures and focuses on early-stage Enterprise software companies, primarily in SaaS, Security and Digital Health. He has extensive experience building enterprise software solutions at Oracle and Google. Arun is passionate about healthcare and using technology to improve outcomes and drive efficiency for patients, providers and payers. He is also an investor in several healthcare groups in India where he serves as an advisor on technology and population health. In his spare time, Arun enjoys spending time with family and hiking.

How did you get into the world of VC? Was it your first job?

No, to give you a little bit of background, I started out on the technology and engineering side. After college and graduate school, I worked at Google and Oracle, building enterprise products for about five years. Then I went to business school, and joined Storm Ventures right after that. It wasn’t my plan going into business school, but I got introduced into the world of venture capital (VC) when I met a lot of VC’s, mostly at startup conferences and other networking events. I was really curious, because one of the things I was trying to do in business school was to learn a lot more about other industries. I’d only worked for a few companies, so I was curious how the industry worked. I spent the summer between my two years of business school at Storm. I really enjoyed the work I did, and really enjoyed working with the Storm team, so I was happy to have the opportunity to come back full time.

Did you see yourself doing this, or being where you are today, when you graduated college?

When I graduated from college, and when I finished graduate school, I was thinking about a more tech-focused career. Like I said, I worked in engineering and product at Google and Oracle. I was trying to transition more into a startup environment, so no, I wasn’t really thinking about venture capital.

Why did you invest in 4me, the Alchemist company? What differentiated them from other investments you were thinking about at the time?

A couple of things. At Storm, we focus on enterprise software and spend a lot of time on industries that are not necessarily mainstream. So I was always interested in the service management space. Given the general level of innovation that had been happening, the service management space was lagging a bit compared to other industries, so I thought there was a lot of opportunity there. When I met Cor, the founder and CEO of 4me, one thing that really impressed me was the caliber of their team. Cor’s background in the space—having started two other businesses, and having successfully exited them really stood out. I thought the team had a unique perspective and depth of knowledge about the industry. That was one of the biggest factors for us.

We also have a broader thesis about how data flows through a lot of these industries. Historically, if you think about it, the way that a lot of technology is set up in these industries has created data problems. There are different systems and different owners for a lot of the data that is needed for these companies to manage their own workflow. As service management has evolved, and this is playing out in a lot of different industries, the need to operate across boundaries and silos has increased more and more, whether that’s geography, or technology systems, or different departments. I don’t want to get too into the weeds, but service management is broadly going through a transition where the new focus is on SIAM or Service and Integration Management. The team at 4me really built their product for that. We thought the shift in the industry really aligned with the expertise the team had, so we thought that was a good match. Plus, they were winning against the more established incumbents as a startup that was bootstrapped, so the growth was impressive. A combination of these factors led us to invest in their company.

What are your thoughts on Alchemist in general?

I think the program is great. I’ll give you a little background about Storm. We’ve been around for about 19 years, invested through five funds, and we’ve pretty much been enterprise focused for those 19 years. The last couple of funds have all been focused on software. In many ways, what Alchemist does is really a perfect fit for us. It’s definitely a sector and stage fit, because we mostly do series A investment, so that’s been fantastic. I’ve met Ravi and Danielle a few times, and I think their focus on running a slightly longer program is important, because things take longer in the enterprise space, particularly as you go into some of these deep tech industries. This helps companies get to a stage where they can really start talking about go-to-market and what levers a venture capital firm like us can bring. I think that’s critical because a lot of times, when you work with accelerators, they have great founders and great companies, but it still ends up being too early for us.\ Alchemist has set up a good model, a long enough program with good mentorship and support, where you get to a stage where a VC firm like us can add a lot of value. I think I’ve been going to Alchemist Demo Day since the second Demo Day. It’s been great working with their companies and seeing them as they grow.

What’s the size of your current fund and how does that compare to funds at a similar stage in Silicon Valley?

Our current fund is $180M, which has been about average for the previous funds as well. Funds are obviously getting bigger, just given some of the recent raises we’ve seen. We’ve decided to stay at a similar size, primarily because we really focus on investing in companies just as they’re getting to the product market fit stage and we work with them on finding go-to-market fit and scaling beyond that. We help them think about building the right sales model, building the right playbook, and thinking about what hires they should make. We can definitely make the fund bigger and bring on more investors, but we’ve found that this has worked for us. Companies that we really want to work with are in that early stage, where they want that first institutional investor. We’ll partner with them and help them scale through the right process.

What’s the typical check size and how is that typically structured?

Typically, our check sizes for the A rounds are in the $2M to $5M range. We can go lower, and occasionally we’ll do seed rounds, or we’ll do larger rounds sometimes. Storm has invested in about 150 companies, led investments in a number of cases, and we’ve co-led, so we’ve pretty much worked with everyone. We’re not very rigid in terms of needing 20% ownership, but we like to own as much as possible, because we tend to be really hands-on with our companies. We’re definitely not a fund that makes a huge number of investments. We are somewhat concentrated and would rather go deeper with our companies than just go broader.

Is there a stage you typically prefer to invest?

Series A. The sweet spot is definitely the A for us.

Do you have a specific vision or focus that differentiates you from other funds?

The emphasis on go-to-market. We spend a lot of time working within the firm and working with other organizations that we can bring in to support our portfolio. Once you’re selling your product to a handful of customers, and there’s repeatability in the use case, we can help you figure out how to scale. One of the biggest issues is that early on, getting to that $500K or $1M run rate, a lot of that comes from founder sales. It varies depending on the size of the account and other factors, but when you make that transition to a sales team and the founder steps back a little bit, a lot of times that process doesn’t go smoothly. The depth of knowledge that the founders have about the sector, the problem they’re solving—it’s hard to replicate that throughout the teams. What we try to do is really think about the go-to-market as a science as much as we can. We want to think about the right playbook, the right sales model, the right customer you’re selling to, and really building those processes out.

We spend a lot of time with our companies building out that process hands-on, so that they can effectively make that transition to scaling, and they don’t hit a speed bump when they get to that stage. When companies come to us, a lot of times we’ll see that they have a grand vision and a good roadmap, and have predictions that are up and to the right that we hope they’ll hit. But on occasion, they’ll stumble a little bit. A lot of it is making this transition, and getting your playbook down, with the right sales model. That’s one way that we try to differentiate from other firms. Additionally, we’ve been very focused on enterprise for 19 years, so we have a huge network in the space across a variety of industries, that can add value to our companies.

How do you think you differentiate yourself individually from other VC’s?

To build on what we talked about, we have built deep relationships in various enterprise sectors given the focus over many years. I’ll give you an example: I spend a lot of time focusing on healthcare at Storm. Over the last few years, we’ve built a strong healthcare practice. As part of that, we have connections to a lot of health systems across the country—including physicians, practitioners, and entrepreneurs. In that one example, we can definitely bring a lot of those connections to bear for the startup. We’ve sat in a lot of these practitioner’s offices, so we can really understand the deeper workflows, that comes with selling to major players and providers. A lot of the work that happens on the backend isn’t really visible to these companies. That’s just one example of the insight and level of connection that we can bring for our portfolio. In terms of the broader firm itself, the go-to-market is a big area, but we also bring in a lot of experts who can specifically give advice on sales and marketing. One other area where I’ve spent a lot of time is security. In fact, we have a number of CSO’s working out of our offices pretty often.

What makes an investment particularly compelling and what’s a big red flag that would make you pass?

In terms of red flags, maybe this is an obvious one. We’re looking at mostly enterprise, so if the founders have never worked in industry, I think that’s a big red flag. It’s not that I wouldn’t talk to them or not invest, but it’s something where I’d definitely want to dig in more. Especially if it’s an area like Cor with 4me and service management, it’s hard for an outsider to really get a sense of what the problems are, and what the incentives are, in terms of why these problems get created. So, it’s not always a technology solution and it’s not always that the best tech wins in a lot of these cases. We really think hard about the unique insight that these founders are bringing, and how their background and experience really leads to that.

On the flip side, things that I would definitely look for, because we invest so early and have to bet on the team, would be the background of the founders. We also look for their early ability to win customers. A lot of times, we see founders that work hard and have passion, which enables them to get customers. However, a lot of the customers are using the product for different use cases. That’s fine early on, because they’re still trying to find the right product, but we’d like to understand what’s really working, what’s the sweet spot early on, so that they can find repeatability. I think that repeatability is important because that leads to more usage and lower churn. That’s when you’ve really found a pain point worth investing in.

We also think about market transitions, and ask if there is something fundamentally changing in the market. Not just a better version of what’s been done before, but something fundamentally changing in the market that will lead people to adapt a new technology, a new product, or a new workflow. When we meet entrepreneurs, we try to already have a thesis on the market, so that we can make faster decisions about whether the idea makes sense or not.

What do you think separates a great founder from a good founder?

One of the things is the ability to hire really great people. As a founder, you have insight into a certain area, but you can’t do it all. That’s why a founding team in general needs to be well-balanced. I think the biggest thing is being able to sell people on your vision and hiring people that are better than you. If you can hire well, I think in many cases, the rest of the issues can be addressed, because you’re getting the right set of people that can work together and solve problems. It’s a hard thing to test for, so we try to spend a lot of time with our founders.

Would you be more likely to fund a really experienced team with a mediocre idea, or a team with no experience that had an amazing idea?

It really depends on the idea and the use case. I would say I’d pick the team over the idea, because it’s unlikely you’re the only one with the idea, meaning that a lot of your success is based on execution. Ultimately, you really have to hustle and execute. On the flip side, if I can add a caveat, the one area where that can be a little more murky, is when there’s a huge market pull. In that situation, a mediocre team in a market that’s really taking off can probably execute better than a great team in a market that has no momentum. If the market is really taking off, a good team can have better outcomes than a great team in a bad market, no matter how strong they are. Oftentimes, we have theses in certain areas, so we have some view on the market and how that might impact these companies.

If there was a piece of advice that you’d give to founders who are raising money that isn’t shared enough, what would that be?

Founders often focus on the current product that they’re selling today and their long-term vision, which is grand and massive if you achieve it. However, a lot of times, in the middle, there’s a big gap. Having a clear strategy for how you’ll progress beyond the immediate pain point that you’re solving today is something that people don’t spend enough time on. I think having a viewpoint on how the market evolves is critical. It’s knowing what transitions are happening in the market and how that gives them tailwind, and understanding why that is the case.

Which investment were you most proud of and why?

Obviously, I like 4me quite a bit. I don’t know if there is one I’m most proud of. Going back to the industry transition idea, where it’s critical to find the right time to make a change in the industry, some of the best companies get the timing right, where many others are too early or too late. In healthcare, there’s a company we invested in called Lexigram, that’s helping payers and providers transition to the value-based care model. They’ve done really well. In security, there’s a company called TruSTAR that’s truly leveraging how companies share information with each other and really enabling that. Those are a few.

What areas are you most excited about now and moving forward into the future?

Security and healthcare are two areas I am excited about due to the changes taking place. A broader answer is that no matter what industry you’re in, if there’s a market transition that’s happening, I would be interested in learning more. The other thing that I think a lot about is the whole idea of the data economy. Historically, a lot of data was stored in silos across organizations, team, and geographies. Any company that is truly building insights across such data is a company that I would love to meet and speak with. So, there’s not one particular area, but these are a few of the areas that excite me.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

An Interview with Cor Winkler Prins, Founder & CEO, 4me, Class 18

Cor’s professional goal is to help the Enterprise Service Management (ESM) industry reach its next maturity level by providing easy-to-use functionality for the support of SIAM (Service Integration and Management).

In 2010, he co-founded 4me to make it easy for all support domains (IT, HR, Facilities, etc.) within large enterprises to work seamlessly with each other, as well as with their managed service providers (MSPs).

In 2003, he helped the ITSM industry establish a new benchmark: the 30-day IT Service Management implementation. By using the predefined processes and detailed work instructions of the Alignability Process Model, and combining that with role-specific training material, a pre-configured ITSM application, and a standardized implementation methodology, it became possible to implement six processes within 30 workdays.

In 1999, Cor helped the IT Service Management industry move away from highly customized implementations based on different interpretations of the ITIL best practices by developing the Alignability Process Model (APM). This was the first comprehensive set of integrated IT Service Management processes that include detailed work instructions for IT professionals. The APM has subsequently formed the basis of all other ITIL-based process models, such as BMC Software's Service Management Process Model and HP's Service Management Reference Model.

What exactly is your startup bringing to the marketplace?

We provide an enterprise service management tool, which essentially is a self-help portal for enterprise employees. When they get stuck or they don't know what to do, and they need help from the Human Resources (HR) departments, or the Legal Department, or from IT, they can submit a request using that self-help portal, or use the app on their smartphone. We route that to the party that should provide that kind of assistance—and that can be an internal department, like the HR department or the IT department, or an external company, to which the enterprise has outsourced a service. For example, this might be the payroll service or the legal service. If all contracts are reviewed by an external legal firm, and that firm also uses 4me, they would link up their 4me environment with the environment of their enterprise customers. When that legal department or somebody coordinating the legal activities of the company wants to pass a request from one of the employees to get a contract reviewed, for example, then they just shoot it off to that external firm using our tool. In the background, we keep track of all the agreements that the enterprise has with the different service providers that employees in the core business rely on.

What was the motivation in creating this company?

In Silicon Valley today, there are a ton of Enterprise SaaS applications being created. Within an enterprise, the employees of the marketing department, for example, go to trade shows and they see something like MailChimp that they like and want to use. They come back and they talk to the IT Department, and then the IT Department says “I don't know, it’s a cloud solution, we’re not familiar with the cloud, and we don’t have anyone to set it up for you.” If the marketing department is persistent enough, then the IT department will hire a consulting firm that has experience with MailChimp and will ask them to set it up. They’ll do a quick security check before purchasing to make sure it meets the necessary requirements. Then, this external firm will set up the MailChimp environment and integrate it, maybe with Salesforce, or with the corporate website, which might run on WordPress.

Once it's running, everything is fine, but then the marketing department wants to do a particular campaign, and for that, they will want to create something special on the corporate website. That needs to be integrated with MailChimp again, so they need to call back the consultants. Or they might discover a bug, or they want to upgrade, but basically every time the marketing department wants to do something special, they need to rely on these consultants. Over time, these consulting firms that specialize around certain technologies like MailChimp or WordPress or Salesforce – they keep getting repeat business from the enterprise. But, as people within the enterprise run into issues with the service, or they have questions or requests, they’ll send requests to the IT department, but they don't have any expertise in how to configure or reconfigure these Enterprise SaaS applications. What they do instead is, over time they establish such a tight relationship with all these different consulting firms that they use for these different technologies that they start to demand service level agreements. This is really good for the external firms, because it means recurring revenue—very steady and reliable. What the enterprise then wants is to have an easy means of collaborating with external firms, and tracking the quality of service that they're getting from each of their external providers.

That is basically what is lacking in the enterprise service management space, a tool that can link enterprise customers to all the different parties that provide services to them. Then, the companies don't have to retype every request that they get from their employees into a different service management tool for one of their external providers. They get accurate reporting on the quality of service that they're getting, and the providers get the same information about the quality of service that they are delivering to their customers. So, when there are issues, they know that there is an issue, that the data hasn't been manipulated by either the customer or the provider, and that the data is reliable. This lets them simply concentrate on making sure that the issue does not recur.

What do you think is the most challenging matter that your company is facing right now?

In the enterprise space, there are a couple of things that you really need to have sorted out well. The first thing is security. That extends immediately to privacy, particularly if you're doing business globally like we are. You have to take very strict privacy regulations into account, particularly in Europe where the GDPR came about last year. That has a huge impact on providers like us. We need to make it easy for our customers, who store, for example, HR data—which is very sensitive. We need to allow these large organizations to prove to auditors that they are doing everything that can reasonably be expected to keep their employees’ data secure. When something bad happens, they need to know how to respond, and how to coordinate that, and they can use a tool like ours for that. Most of our customers in Europe do so. But, there are additional things that our tool needs to be capable of, because of the GDPR. For example, in our tool, a lot of focus has been put on being able to audit what has happened in the past. The GDPR on the one hand demands exactly that, but on the other hand, if an employee, for example, demands from the company that the data is erased, which is “the right to be forgotten” in the GDPR, then the tool needs to be capable of removing the entire history, the entire audit trail.

Most enterprises, they demand that their providers are SOC compliant. Services like ours, and many Enterprise SaaS applications, process data from these organizations. We need to be able to prove on a regular basis that your tools are being submitted to advanced security testing, penetration testing, by a reputable firm. We need to be able to provide the audit  reports that our customers require. It's all pretty standard for large enterprises. For us it means that we pay a significant amount every year, simply to stay compliant for our large enterprise customers. Their auditors will come and check. It is very costly to do that, but it’s necessary to play in this space.

Can you tell me a little bit more about your background before you got started and how that prepared you for what you're doing now?

I've been in this industry, the service management industry, for more than 22 years. I grew up with a new methodology, a new set of best practices that were initially published in the U.K. This set of best practices is called the IT Infrastructure Library (ITIL). It quickly became popular worldwide, but the thing that we started to do is to build tools to support those processes. The first company that I helped set up, together with our CTO, Laurens Pit, a co-founder of 4me, sold to Hewlett-Packard. For us, that was the first time that we went through this cycle. Later on, me and Laurens both went our own ways. I started a company focused on service management, more on how to properly deploy service management in very large organizations on a global basis. We licensed intellectual property on that to specialized consulting firms around the world. We sold that company to BMC Software, which at the time was the leader in the service management space. Laurens later sold his company to ServiceNow, which had then just become the leader in the service management space. By combining our experience, we decided that we had sufficient background to take on these more established players, like ServiceNow and BMC Software.

We found that they were completely missing the boat on the cloud, although ServiceNow would definitely disagree with that, of course. They should be applauded for getting organizations onto the cloud with their service management solutions. However, they did it in a way that did not fully make use of all the capabilities that the cloud offers. Essentially what they did is provide a separate infrastructure for each of their customers. It's virtualized, but it doesn't allow for collaboration between organizations, which  is where they are now lacking. When we saw that misfit, between what was happening in reality, with enterprise companies selectively outsourcing more and more of their services, and what the service management tools on the other hand were providing and the direction that these tools were going in, we thought that this was silly. Because in a couple of years, there will be organizations who run into a wall because they simply won’t be able to manage the large number of providers they have to deal with on a daily basis using their traditional enterprise service management tools.

What made you want to apply to Alchemist?

We had been in existence for a few years before we applied to Alchemist. We bootstrapped the company and were not in need of additional funding, because basically we had sufficient customers to cover our costs. Whenever we signed up more customers for our service and had more revenue coming in, that’s when we would add more people to the organization, not before then. So, we were not making a profit because we were reinvesting every dime that we received from customers into the growth of the company. The reason why we decided to join Alchemist is because we wanted to establish a narrative for investors. Ultimately, the goal for us is to do an IPO. At that time it has to be a logical narrative for future investors. We’ve identified a number of stages in our path from where we were at that time to IPO. On the investment side, we realized that we needed to get some funding to accelerate. Particularly in the areas of sales and marketing, where we had little experience, we needed to bring some people in.

What we decided is that we’d sign up with Alchemist, which is very well-respected in Silicon Valley by other venture capitalists (VC’s). They would be able to open the door with other VC’s. Neither myself nor my cofounder went to Stanford or MIT, and we needed a way to establish more context in Silicon Valley. That’s what we were looking to Alchemist for, and that has been very successful. Even before we graduated from Alchemist, we were able to secure a funding round from Storm Ventures, which also specializes in Enterprise SaaS.

How would you describe your experience at Alchemist?

I really enjoyed it, and I learned so much. When you’re working with your product, mainly on a day-to-day basis, and trying to get more customers and look at features that set your product apart, you really have to switch your mindset at Alchemist to think about growth. Not just from one customer to the next, but thinking in broad strokes. In thinking of ways to get there, you’re thinking about funding as one way of helping you, but when you have funding, you need to find out what you’re going to do with it. You don’t have time to think about that during the day. Having certain topics addressed on Thursday evenings was really nice, because it helped us look at our company from a different angle, which always sparked new ideas.

What do you think would define success for you and your company in the next 12 months?

We’re trying to gain market share, and we primarily measure our growth by  the number of users on our services. We track our ARR, and in the past few years, we’ve been pretty consistent in growing at about 50% ARR YoY (year over year). Ideally, if we do things right, we should grow a bit faster than 50% this year. That is always what we’re shooting for every year – that we get our sales and marketing so well-organized that we manage to sign up more customers, more quickly.

What insights would you want to share with foreign founders, and the next generation of founders more generally?

I believe that the focus on SDR’s (Sales Development Reps) – sending out emails, hiring sales reps, setting up sales calls to make appointments for demos, etc., no longer works. A few years ago, when it was new, it worked. These days, people get so many of these calls that they’re no longer effective. That has been a focus to some extent during the sessions at Alchemist, but I think it’s time to start looking at alternatives, like teaming up with industry analysts, seeing how you can use trade shows, seeing how you can carve out your niche. That is something Alchemist helps with quite a bit. There were a few sessions that focused on that, and gave us some great ideas.

For the foreign founders, I believe that it is essential to be in the Bay Area. I don’t think it’s wise to think you can get VC funding here, while not being here. I always tell foreign founders that they also need to be a Delaware C Corp. I also tell them that it’s basically impossible to hire someone in the Bay Area if you’re living abroad. If you do manage to hire them, why didn’t they already have a better offer? It’s better to source talent in Eastern Europe, where people are super well educated, and not cheap, but affordable by Bay Area standards. If the founders are from India or Europe, and have a good understanding of the local culture, they should be able to manage people in their country of origin, from the Bay Area. The other thing to keep in mind for foreign founders is that it’s really hard to get visas. I’m a green card holder—I had to renew last year, and it was incredibly painful and time consuming. If you’re traveling with an expired green card, even if you applied for renewal at the right time and have a temporary extension, it becomes painful every time you re-enter the US. Why not just work remotely with your colleagues so they do not need to come to the US?

What are some highs and lows you’ve had in the last month?

One of the highs recently was an email I received from the legal department of a large managed service provider (MSP) that we’ve been working with to establish a partnership. We’ve been working with them for over a year already, and it’s taken a lot of time to go through their incubator process of looking at new technologies that they can use to get a competitive advantage. The email included a signed reseller agreement, which was the major milestone we’d been hoping for. A big low would be when one of your people who you’ve been training and investing in, leaves because they can earn 150% of their salary with another, bigger company. I don’t blame that person at all, because we can’t realistically match the offer, but it does set you back. The highs and lows come on a daily basis. You need to be able to stay in the saddle, particularly during the first few years, which can be an emotional rollercoaster—but also the fun part. Some people thrive on that, the adventurous nature of startups. That’s one of the things I really enjoyed about Alchemist—you could tell when one of the founders in your class had a rough day or a rough week. It was so helpful for someone to be able to tell their story and feel the support from the group, even just the emotional support. As a founder, you can really feel alone sometimes, especially when the rest of your team is abroad.

What skill or lesson has been the hardest to learn, and has there been anyone that really helped you become a better founder?

Pitching. I was not good at providing a decent pitch. At Alchemist, it was super helpful, not just to get practice, but also tips about what to do and what not to do. It extends not just to pitching VC’s, but also talking to customers. At a certain point in time, when you’re talking to CIO’s or C-Level Executives, they don’t care about the functionality of the tool anymore, they care about the vision. When you can paint that vision for them, if they get grabbed by it and feel like joining you on that journey, it’s wonderful. Alchemist has helped with that a lot.

At Alchemist, the book recommendations were also really helpful. Each and every lecturer had something to teach us, some little nugget that we could take home with us and stew over, in addition to all the other things we learned. It opened a world that I hadn’t paid much attention to. I really enjoyed developing a new skill, like pitching, and it was definitely worth improving in that area. The experience was certainly worth it.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

“Founder-friendly” ...until you stall


Founders who are in the midst of their fundraising roadshow will pitch VCs who say they are “founder-friendly” in regards to how they work with founders to help them build their companies. Here are 3 tips to connect the dots between the self-proclaimed founder-friendly VC’s mindset and the tough, but fair, conversations they will have with you when your business hits some road bumps.

Tip 1: “Friendly” might not mean what you think it means

If your startup has multiple founders, it is typically the CEO co-founder who is the point person to negotiate the term sheet. As the CEO co-founder, you need to have the self-awareness to accept that the VC acts as the corporate stewards in the best interest of the company, their LPs, founders, and employees. The rubber meets the road when your startup has a critical business issue. It could be the business is not performing at the hockey stick growth level, or that the company's brand was hurt by a devastating Human Resources (HR)-related issue due to company culture problems.  

Great CEOs have self-awareness. They understand everyone is friendly when you are hitting your sales targets. But when you miss two consecutive quarters of revenue, or when your startup is on the front page of the WSJ or TechCrunch for a HR issue, there are consequences. The way the CEO leads and the speed it takes to navigate the startup out of the storm will dictate how long the relationship remains friendly.

Tip 2: Deal Terms exist to de-risk, not to offend

VCs and founders work with law firms to deploy billions of dollars a year in venture funding. There are few bad actors and no two term sheets are exactly the same. There are also many deals that fall apart. That is why founders are encouraged to get multiple term sheets. But a term sheet with a lower valuation than you expected or aggressive downside protection doesn’t mean the VC is not founder-friendly. It means that your traction, net revenue, growth, and maybe the A team, is not in a place to give you leverage in the negotiation. That is what is reflected in the term sheet deal terms.  

The more uncertainty the Venture Fund has in your business, the more they will want to protect their downside and their LPs’ investment. Traction and revenue growth will drive better terms. Be willing to re-engage with investors who have passed on you in earlier rounds. Plenty of VCs miss deals that they wish they could redo.  

Tip 3 The intersection between founder-friendly and board governance

The CEO co-founder is the only founder who reports directly to the board. It is the board’s role to hire and fire the CEO. This is an interesting dynamic when you have multiple founders. No matter how you package it, the lead Series A Partner will sit on your board and will have the power to be not-so-friendly when the business is not performing. Again, this doesn't mean they can’t empathize with the sacrifices founders have made. At the end of the day, the board needs to ensure the company is growing and that CEO is the right person to make that happen.

About Darren Kaplan


Darren Kaplan is the Managing Director of The Last 90 an early-stage venture fund that invests and operates companies that are redefining the future of work. Prior to that Mr. Kaplan was the co-founder of hiQ Labs, a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator Selection Committee Member and Mentor.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The Accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The Accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

An Interview with Na’ama Moran, CEO of Cheetah, Alchemist Class 2

Na'ama Moran came to the US from Israel to study economics, math and political science at Cornell. After school, Na'ama joined NYC’s emerging markets hedge-fund, Greylock Capital Management, as an analyst. She left finance to pursue her dream of building products that make people's lives better with technology. She moved to Silicon Valley where she concurrently took classes in Computer Science at Stanford and co-founded Zappedy, a services platform enabling local businesses to close the loop between online marketing and offline sales. The company was acquired by Groupon in 2011. While working at Zappedy, Na'ama encountered a large variety of restaurant owners and food entrepreneurs. She discovered the hardships of running a restaurant and was surprised by the lack of transparency and ease-of-use in such an important marketplace. She decided to do something about it. Na'ama met cofounder Peretz Partensky while camping together at Burning Man. The two started working on what would eventually become Sourcery and raise $5M in funding. Her experience at Sourcery  led to her founding Cheetah Technologies to be the easiest, fastest, and most affordable way for small-medium businesses to get their daily supplies and services. In her spare time, Na’ama loves to practice yoga, hike the beautiful Bay Area trails, and read science fiction books.

What exactly is your startup bringing to the marketplace today?

My company today is like an Instacart for small businesses. We enable businesses to order their daily supplies from their mobile phone, anytime and from any place, and connect to a large network of local and national wholesale suppliers.

What was the impetus behind starting that? What made you think this is a good idea? What was the inspiration behind this venture?

I've worked with small businesses for the last couple of years, initially with restaurants in my previous business, Sourcery. What was really interesting about this market is the lack of transparency and the lack of a convenient way for small business owners to manage their daily purchasing and know product  pricing in advance. The way they manage their businesses is very antiquated. By accessing wholesale suppliers that are priced transparently on our app, and building this alternative supply chain, we’re enabling small businesses to have access to both local and national vendors, and benefit from a very convenient same day or next day delivery.

Can you talk a little bit about your background before the startup?

I worked in finance in a hedge fund for a couple of years right out of college. Then I moved to the Bay Area and I've been doing my own startups since then. For the last couple of startups  I've run, I've been working with small business owners primarily in the food service space. That gave me insight into the types of problems they were having.

Is there any previous experience or situation, either personally or professionally, that you felt helped prepare you for this startup? Was that working in finance or working with food services? Is there one thing that helped prepare you for what you're going through today?

I don't know if there was one thing. I think it's the connection of all the different businesses I’ve been doing for the last ten years. All of those startups taught me something different about finding product-market fit, building a scalable business, building and scaling a team. At my previous company Sourcery, which is the company that was enrolled in Alchemist, is when I got most familiar with the problems of small restaurants and small businesses in the food service space. It gave me deep familiarity with the problem and the impetus to come up with a solution.

On the topic of Alchemist, what made you apply to Alchemist?

I really like Ravi and his focus on the B2B space.I thought they had a very strong network of mentors.

Now that you've gone through Alchemist, what do you think was the most valuable thing you took from going through it?

It has a very strong network of mentors and alumni that is valuable for early stage startups. Especially people who are creating very large businesses in the B2B space and have a lot of knowledge and experience to share. The preparation for the demo day was very useful as well.

What is the most challenging matter you guys are currently facing? Fundraising, talent recruitment, product development?

I think recruiting in the Bay Area continues to be a very challenging endeavor, because the environment is so competitive. I would say being able to recruit top talent continues to be our biggest challenge. Our business is operations heavy and therefore, the various challenges we are facing have to do with scaling operations.

Can you talk through one of the highest highs and lowest lows of the last month?

We've grown our topline by more than fifty percent on a quarterly basis, compared to last quarter. This is definitely one of the highlights. One of the low moments we had, had to do with  recruiting. We gave offers to people that we really wanted to bring onto the team and they we were not accepted. This was pretty disappointing.

Looking to the future, what constitutes success and what are your goals in the next twelve months?

Being able to meet or exceed our goals would be a strong indication that we had a successful twelve months. We have certain projections and they're pretty aggressive so being able to, as they say, “meet them or beat them” would be really good.

What entrepreneurial lesson or skill do you think took you the longest to learn or are you still continuing to work on?

I think there is a skill in finding product-market fit. Unless you get lucky, you need to develop this skill in a very methodical, focused way. I believe I have been able to develop this skill over time, but I'm sure there is still a lot to be learned. Today, with my current company, I think we have a proof that we have found product-market fit and the biggest challenge is to scale the business very rapidly and be able to confront very strong competition in our markets. The challenge is different. The challenge is really about scaling a business and being able to sustain it, rather than figuring out if we have product-market fit.

And so if you could hypothetically go back to yourself on the first day of your startup, what advice would you give yourself?

Be able to let go of bad ideas and bad people faster.

Is that similar to the Silicon Valley saying, “Fail quickly, fail often”? Is it better to get through a bad idea and move on to something good than to hold on to it?

Yes. Being able to let go of bad ideas or bad strategy or bad people a lot faster probably would have made me successful faster than I have been.

Do you personally have any advice for founders who are not from the US?

It’s all about the network you build here. For people who are not from the US, it might be a little bit harder to build their networks. Being able to build a network as fast as possible is probably the biggest advice I can give.

Has there been anyone specifically that helped you get to where you are today, that you think you wouldn’t be here if it weren’t for them?

There are various people like that. Some of my investors have been incredibly supportive and informative in helping me to get where I am. There have been people I work with and colleagues that have been instrumental in helping me get to where I am today. I don't think there is one person. There are multiple people, between investors, colleagues and mentors, that I can point to.

How did you get in contact with soe of these people and develop that relationship? That is something a lot of founders struggle with, building networks and trying to get to know these people. They find it really hard.

It’s a good question! It's just a matter of always trying to make connections or initiate meetings. Even if the meeting doesn't necessarily work out to provide you what you want, ask the person to introduce you to other people that could be useful. Just constantly build that network with every meeting that you have. Be able to build a network through friends. I went to Stanford for a certain period of time, I met some people there. I went to Alchemist and YC, these are networks I am a part of. All these different organizations are ways to build those networks.

Of all the jobs you can have, startups are more on the intensive side. The types of people that start companies, tend to have a passion for it. For you, whether it be five or ten years from now, what constitutes success for you personally and this venture? What would make you feel this was all worth it at the end of the day?

I think it would be the impact I end up having on the lives of my customers and employees. Hopefully, I will see some significant monetary return for my efforts as well. I'm doing this  to really have an impact and change the way people are doing business, and change the way our employees are living their lives. Creating wealth for both my customers, employees is my number one goal and inspiration.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.